Lenovo considering RIM buyout to boost mobile biz

Lenovo CFO Wong Wai Ming says the company is actively pursuing ways to improve its position in the mobile device market, spurring speculation that the Chinese firm may be planning to cozy up with Research in Motion – or even swallow it whole.

In an interview with Bloomberg at the World Economic Forum meeting in Davos, Switzerland on Wednesday, Wong said Lenovo is considering acquisitions as one way to stave off competition from smart devices, which have been cutting into its PC business.

"We are looking at all opportunities – RIM and many others," Wong said. "We'll have no hesitation if the right opportunity comes along that could benefit us and shareholders."

Although he gave no specifics of what might have been proposed, Wong confirmed that Lenovo has spoken to RIM and its bankers about "various combinations or strategic ventures."

Wong would not say when Lenovo might make a bid for a mobile-maker – RIM or any other. But he did say the valuation of such a deal would be an important consideration and observed that RIM's stock price has recently returned to the double digits.

The Canadian smartphone maker's shares have indeed been rising in anticipation of its forthcoming BlackBerry 10 platform, due to launch at the end of the month. But in December RIM was booted from the Nasdaq-100 for poor performance, and most analysts predict its troubles are far from over.

Lenovo's own mobile business, on the other hand, has been doing well, despite arriving late to the market. It launched its first smartphone in the second quarter of 2012, and six months later it was already outselling competitors Huawei and ZTE in the Chinese market. It's expected to take the lead from Samsung soon.

But that's China. Outside Asia, Lenovo is primarily known as a PC and notebook maker. If its smartphone business wants to gain better footing in the West, where giants Apple and Samsung overshadow all other competitors, acquiring or partnering with a company like RIM may be its best bet.

It's certainly a strategy that has served Lenovo well in the past. The Chinese firm bought IBM's PC business in 2005, including its respected ThinkPad brand. It has since risen to become the world's largest PC vendor, surpassing even HP (by some estimates, at any rate).

But struggling RIM would be the one to benefit most from a deal with Lenovo – or so its investors seem to think. The Canadian company's shares surged earlier this week when CEO Thorsten Heins told German newspaper Die Welt that he was considering various options, including selling off RIM's hardware business.

RIM declined to give any comment on a possible deal with Lenovo, but its shares rose 2.25 per cent anyway on the news and continued to climb in after-hours trading. ®